Lemmerbell Ltd & Anor v Britannia Las Direct Ltd

A contractual break notice must ordinarily be given by the lessee, but it may be given in the name of an agent. Where the agent does not identify the agency, validity depends on actual authority and circumstances enabling the recipient to act safely, knowing that the notice binds the lessee. A general agency is unusual and requires clear evidence; payment of rent and occupation alone are insufficient. The contextual approach to obvious slips in [1997] AC 749 does not permit substitution of a different named tenant where the notice says that person is successor in title. A landlord is not obliged to identify defects in a professionally drawn notice, and equivocal silence will not ordinarily found estoppel.

The appellants were landlords of two units let to Britannia LAS Direct Ltd under leases containing break clauses. A related company, Life, served notices in its own name, describing itself as successor in title to Direct, although no assignment had occurred and Direct remained the lessee. Rattee J inferred that Life was Direct’s general agent and held that the notices terminated the leases.

The landlords appealed. The issues were whether Life had authority to give the notices, whether the notices could be construed as notices by Direct, and whether the landlords were estopped from relying on the defects.

Peter Gibson LJ gave the leading judgment. Hutchison LJ and Butler-Sloss LJ agreed.

1. Disposition. The appeal was allowed. The declaration that the leases had been terminated was set aside. The declarations sought by the landlords were granted, the counterclaim was dismissed, and the respondent was ordered to pay the costs of the appeal, the application and below.
2. Agency. A break notice may be given by an authorised agent. If the notice is not expressed to be given as agent, it is effective only where the agent had actual authority and the circumstances enabled the recipient to act safely, knowing that the notice bound the principal. General agency is an unusual commercial relationship, particularly where the tenant is the principal, and its inference from conduct requires clear evidence. Payment of rent and occupation do not, without more, establish authority to terminate the lease.
3. The evidence did not establish that Life was Direct’s general agent. The group designation used in correspondence was ambiguous; there was no evidence of an actual appointment or board authority; Direct had become dormant; and Life treated itself as successor in title rather than as agent. The notices therefore did not enable the landlords to know safely that Direct had authorised and given them.
4. Construction. The contextual approach in Mannai Ltd v Eagle Star Assurance Co Ltd [1997] AC 749 may cure an obvious slip, such as an incorrect date whose correction is clear to the reasonable recipient. It could not cure these notices, which expressly identified Life as successor in title and left uncertainty over the identity of the current lessee and the source of authority.
5. Estoppel. Neither estoppel by convention nor estoppel based on silence was established. There was no sufficient common factual assumption, and the landlords were under no duty to explain defects in professionally drawn notices. Their cautious replies could not reasonably amount to a representation that the notices were valid.

1. Court of Appeal (Civil Division). On 8 October 1998, the court unanimously allowed the appeal, set aside the declaration below, granted the landlords’ declarations, dismissed the counterclaim and made costs orders.
2. High Court of Justice, Chancery Division. Rattee J, on 22 May 1997, held that Life was Direct’s general agent and that the break notices effectively terminated the leases.